Last week Americans and the majority of the world celebrated Halloween, one of America’s favourite holidays. The US National Retail Federation projected that this year more than 179 million Americans celebrated Halloween and spending on costumes, candy and parties reached $ 9.1 billion which would mean an all-time high since the federation first began tracking Halloween spending some 12 years ago & an increase of 8.3% from last year’s previous record of $8.4 billion. A real ‘treat’ for both US retailers and Halloween enthusiasts alike.

Also stock markets are no strangers to the ‘treats’ associated with Halloween. Some investors are familiar with the so called Halloween ‘effect’ which is actually a variation to the perhaps better known investment phrase “Sell in May and walk away”. The Halloween effect is an investment ‘strategy’ which suggests leaving the market in May and coming back after Halloween (October 31st ). This strategy is influenced by the concept of seasonality, more specifically that stocks tend to perform better in winter months (November to April) than in summer months (May to October).

Surprisingly enough the Halloween effect is actually one of the most powerful trends in the so-called stock market wisdoms universe and was confirmed by a study (“The Halloween Indicator: Everywhere and all the time”) from 2012 by B. Jacobson and C.Y. Zhang. The study examined returns from 108 countries (basically all of the world’s stock markets) for as long as three centuries (319 years to be exact). Over three centuries, stock markets worldwide gained on average 6.9% during the winter months (November to April) while in the summer months (May to October) stock markets were up on average by just 2.4%. So the overall Halloween effect, that measures the difference between winter and summer returns, is 4.52%. And this effect is increasing in strength: the average difference between November-April and May-October returns has been 6.25% over the past 50 years and the strategy even beats the market more than 80% of the time over 5 years horizon.

However, the ‘mystic’ thing about the Halloween effect is that although statistical analysis has shown the trend is indeed real, no-one has really worked out exactly the reason behind it: according to the authors of the study the most compelling reason might be that people have a tendency to take some holidays in the summer so they pull money out of the stocks to pay for their trips and because they worry that something ‘bad’ might occur while on vacation. Another reason might be that companies and fund managers are more active in the winter months as the end of the calendar year approaches and they may need to improve their figures.  Whatever the cause the true reason still remains “a puzzling anomaly”. No doubt the following six (winter) months will again test the Halloween effect.

Last trading week the Ageas share decreased by 1.80% to EUR 41.22 while the EuroStoxx 50 increased by 1% and the Stoxx Insurance index decreased by 0.2%.